Myths and Realities about Life Insurance

We are nearing towards the end of another financial year and like any other year; everyone is on the run to save taxes. We see a lot happening around, in this JFM quarter where the motive is to save maximum tax. However, it’s an icing on the cake if it helps to plan the future as well.

One of the most preferred ways to save taxes is to buy a life insurance. No wonder, most of us have Life Insurance or even if we don’t have, we know what it is. Life Insurance is that tool which ensures that your loved ones would be taken care of even when you are not around.But in the name of innovations, this most important tool has lost its relevance. Let’s see the common presumptions which if not taken care of, can put your family’s future at stake.

1. I am too young to have a Life Insurance

Young

It’s not your age, it’s your financial responsibilities which determine whether you need insurance or not. If you have people who are financially dependent on you; no matter how young you are you need a life insurance.

2. I have Insurance, I am sorted

Adequate

Often, when I ask people, “have you thought how your family would live when you would not be around”? People respond “I have bought a life insurance to secure their future”.

But what people don’t understand is having an insurance is not enough, if it’s not adequate to fight the unforeseen. And unforeseen in this case is your family’s day to day needs for lifetime. Just think about it – Is your life insurance enough which can provide for your family’s living for lifetime?

3. I don’t need to review my Insurance

Review

People presume that once they buy adequate insurance, it’s for lifetime. But it does not end here. Life changing events can be expected and unexpected and along with them arises a need to review the life insurance. The life changing events which call for an insurance review are a new home purchase, starting a family, assuming huge debts or mortgage, changing jobs or a career change.

4. I prefer Insurance from XYZ Co. as it’s cheaper

Low Cost

With a wide array of insurance products available, it’s difficult to choose. And if one of these competitive products are offered to you at comparatively lesser rates, it tends to become your preferred choice. But remember, Cheapest is not always the best. There are various factors such as claim settlement ratio, company’s track record etc. you need to look at before you buy a life insurance. Buy what’s suits the best and which is hassle-free as you would not be around to protect your family.

5. I have bought Life Insurance for all my family members

Family Insurance

Losing the breadwinner of the family is not just a social loss but it brings along with it great financial setback to the family. You need life insurance to compensate for the financial loss that your family will have to bear when you are not around. Hence, only breadwinners need a life insurance. It’s best to have a cover for only those who need it.

6. The maturity value of my Insurance is…..

Maturity Value

Last but the biggest myth that people carry is that life insurance has a maturity value. But before that, “What’s the maturity value of your Car Insurance”?? Absurd, isn’t it?? As car insurance is meant to compensate you only in case of car damage. Hence, the premium that you pay is an expense and not an investment which would yield you returns. The same applies for life insurance as well. Stop asking “What’s the maturity value of your life Insurance”. As it would mature only when you are not around and I pray that day never comes.

Alas, life is unpredictable and we don’t know what life has for us in store. So be prepared and make sure your family has protection when they need it the most.